{"id":1623,"date":"2010-04-15T10:32:12","date_gmt":"2010-04-15T15:32:12","guid":{"rendered":"http:\/\/jimbovard.com\/blog\/?p=1623"},"modified":"2010-04-15T10:32:12","modified_gmt":"2010-04-15T15:32:12","slug":"1994-tax-day-article-the-growing-irs-dictatorship","status":"publish","type":"post","link":"https:\/\/jimbovard.com\/blog\/2010\/04\/15\/1994-tax-day-article-the-growing-irs-dictatorship\/","title":{"rendered":"1994 Tax Day article: “The Growing IRS Dictatorship”"},"content":{"rendered":"

Tax Day is a time to pause to appreciate all that Washington does for us. Here’s a piece I wrote 16 years ago. Unfortunately, few newspapers or magazines are stooping to notice the danger of the IRS’s power these days.<\/p>\n

The article was accepted by Wall Street Journal editorial features editor Amity Shlaes, and was edited by Barbara Phillips – one of the most talented and diplomatic editors I had the pleasure of working with. She had a knack for gently weaning an author from his hyperbole.
\n*****<\/p>\n

The Wall Street Journal <\/strong> April 14, 1994
\n The Growing IRS Dictatorship <\/strong>
\n By James Bovard <\/p>\n

A Gallup Poll released last week found that two-thirds of
\nAmericans believe that the Internal Revenue Service abuses its
\npower. Yet few people realize exactly how much arbitrary power
\npoliticians and judges have granted IRS agents over other Americans.
\nThe IRS has become the authoritarian means to paternalistic ends. <\/p>\n

People can fall under the IRS’s sway even when they believe they
\nare dealing with their own tax accountant. The IRS has conducted
\nhundreds of undercover operations in recent years in which IRS
\nagents have been officially permitted to masquerade as professionals
\nand to entice other citizens to violate tax laws. The IRS admitted
\nin 1989 that it was using 900 controlled informants (double agents)
\nand that 40 of those informants were accountants. <\/p>\n

IRS undercover and other agents are practically given official
\npermission to scorn the law of the land. The IRS’s official manual
\nstates: “In receiving unsolicited information for the first time
\nfrom an informant, the Service may accept the information and, in
\naccordance with its value, may pay for such information even if it
\nmay have been obtained illegally by the informant.” A federal
\nappeals court ruled on Dec. 30 that evidence illegally seized by an
\nFBI agent can be used by the IRS in a tax prosecution. <\/p>\n

The IRS has multiplied its use of force against U.S. citizens in
\nrecent years. Since 1980, the number of levies — IRS seizures of
\nbank accounts and paychecks — has increased fourfold, reaching 3.3
\nmillion in 1992. Unfortunately, the IRS makes tens of thousands of
\nunjustified seizures each year, according to the General Accounting
\nOffice. <\/p>\n

The most frequent reason for the wrongful levies is the IRS’s
\nfailure to accurately record citizens’ and businesses’ tax payments.
\nThe GAO noted: “IRS procedures require that levy notices be reviewed
\nfor completeness and readability prior to mailing. This process,
\nhowever, is normally limited to a check of the name and address
\nappearing on the levy.” This is a pathetic standard of review for
\nseizing private citizens’ savings. <\/p>\n

IRS officials have sweeping discretionary power to financially
\ndestroy people’s lives. Take, for example, the case of Melvin
\nPowers. In 1983 the IRS decided to investigate Mr. Powers’s 1978 and
\n1979 tax returns. Mr. Powers was a Houston builder and owner of five
\noffice buildings; he had only an eighth-grade education. The IRS had
\nmade no effort to examine Mr. Powers’s tax returns during the three
\nyears of the statute of limitations. Six weeks before the statute
\nexpired, an IRS agent asked Mr. Powers to sign a waiver of his
\nstatute of limitations, allowing the IRS to investigate him for
\nanother three years. Mr. Powers willingly agreed. In 1986, the IRS
\ndisallowed almost all of Mr. Powers’s business deductions for 1978
\nand 1979 and demanded $7,145,266.71 in back taxes, interest and
\npenalties. <\/p>\n

Shortly after the IRS’s assessment, a bankruptcy court trustee
\n“seized all of [Mr. Powers’s] operations, caused [Mr. Powers] to
\nvacate his office premises, and took possession of his books and
\nrecords for all years,” as a 1993 Tax Court decision noted. Then, in
\nearly 1991, the IRS reversed itself and conceded that Mr. Powers
\nactually had legitimate losses for the years under scrutiny and thus
\nowed no taxes for those years. After IRS officials canceled the $7
\nmillion tax bill, Mr. Powers successfully sued the IRS to cover his
\nlegal costs for the case. U.S. Tax Court Judge John Colvin noted
\nlast year that the IRS “contends that there is a basis in law for
\nthe notice of deficiency because the notice of deficiency is
\npresumed correct” and that the IRS “made no attempt to obtain
\ninformation about the case before” demanding a $7 million payment. <\/p>\n

Amazingly, the IRS declares that it is entitled to impose
\npenalties or seize property for overdue taxes even after the agency
\nadmits sending tax deficiency notices to the wrong address. Turn to
\nthe case of Clayton and Darlene Powell. <\/p>\n

The Powells moved from Adelphi, Md., to Mitchellville, Md., in
\nlate 1987, and filed a tax return with their new address in early
\n1988. A few weeks after the IRS received the Powells’ new address,
\nthe agency sent a notice of deficiency for their 1984 tax return to
\ntheir old address. The local post office — though it had the
\nforwarding address — returned the notice to the IRS. Though the
\nthree-year statute of limitations had expired on the Powells’ 1984
\nreturn, on Dec. 28, 1988, the IRS sent a notice to their new address
\ngiving the couple 10 days to pay $6,864 in back taxes, interest and
\npenalties or have their property seized. The Powells paid and then
\nsued the IRS to get a refund. <\/p>\n

The federal appeals court ruled that “the Powells are entirely
\ninnocent” and ordered the IRS to issue a refund. The IRS then
\nappealed the decision to the Supreme Court, contending that as long
\nas the IRS mailed a tax deficiency notice to a taxpayer’s “last
\nknown address,” the taxpayer must be presumed to have received the
\nnotice — even when it is indisputable that he did not receive it. <\/p>\n

The Justice Department, in its brief on this case, noted that the
\nIRS “issues more than 2 million notices of deficiency each year and
\napproximately 240,000 of those notices were returned undelivered
\nduring the past year.” The Justice Department whined that requiring
\nthe IRS to actually notify citizens of tax assessments before final
\nseizure notices would impose “unmanageable detective burdens” on the
\nIRS. “This case threatens to create a ‘window of time’ during which
\nthe Internal Revenue Service may be helpless to protect its rights
\nin pursuing delinquent taxpayers,” the Justice Department fretted. <\/p>\n

The Supreme Court denied the government’s request to re-examine
\nthe Powell case. Yet even though the IRS lost in federal appeals
\ncourt on this issue and paid back the Powells, the agency has
\nformally chosen to disregard that court’s verdict — to follow a
\npolicy of “nonacquiescence,” in legal terms. The IRS believes the
\ncourt made a mistake and thus that the agency has no obligation to
\nrespect its decision. This means average taxpayers will have to
\nspend thousands of dollars in legal costs to re-achieve the basic
\nrights that the appeals court sought to give them. The Powell case
\nepitomizes the IRS perspective that the citizen has an unlimited
\nobligation to comply with its demands — even when the IRS fails to
\ninform the citizen of its demands. <\/p>\n

Supreme Court Justice George Sutherland declared in 1933, “The
\npowers of taxation are broad, but the distinction between taxation
\nand confiscation must still be observed.” Unfortunately, this
\ndistinction is increasingly lost to the average taxpayer facing the
\nfull force of government revenue collectors. <\/p>\n

— <\/p>\n

Mr. Bovard is the author of “Lost Rights: The Destruction of
\nAmerican Liberty<\/strong>,” just out from St. Martin’s Press. <\/p>\n","protected":false},"excerpt":{"rendered":"

Tax Day is a time to pause to appreciate all that Washington does for us. Here’s a piece I wrote 16 years ago. Unfortunately, few newspapers or magazines are stooping to notice the danger of the IRS’s power these days. 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